Which payment is a typical example of cash flows from financing activities?

Disable ads (and more) with a membership for a one time $4.99 payment

Master the UCF ACG2021 Principles of Financial Accounting Final Exam. Study with comprehensive practice tests, flashcards, and multiple choice questions, each with detailed explanations. Ace your exam!

Cash flows from financing activities include transactions that involve obtaining or repaying capital. A cash dividend paid is a typical example of this type of activity because it represents a distribution of earnings to shareholders, reflecting how a company is managing its financing and returning value to its investors. This cash outflow is essential for understanding how a company finances its operations and rewards its investors, making it an integral component of the financing section of the cash flow statement.

In contrast, cash received from customers and cash paid for supplies pertain to operating activities, which involve the core operations of the business—providing goods and services and managing the cost of running the business. Cash received from loans represents an inflow related to financing activities, but paying dividends emphasizes the company's distribution policy and shareholder relationships, which is specifically categorized as a cash flow from financing.